OBLIGATIONS: SUMMARY SHEETS

THE OVERALL CHECKLIST

§ Formation?
§ Misleading and deceptive conduct?
§ Equitable remedies (part performance; constructive trust)?
§ Estoppel?
§ Restitution (unjust enrichment)?

SUB-CHECKLIST FOR FORMATION

The question a formation hypothetical asks: does A have enforceable contractual rights against B?

§ Parties must reach an AGREEMENT (offer and acceptance)

§ Each party must provide CONSIDERATION
§ The parties must have the INTENTION to create legal relations
§ The agreement must be COMPLETE and CERTAIN
§ The parties must have legal CAPACITY
§ The parties must have applied with any FORMALITIES

GENERAL ADVICE

(1) Focus on WHO you are ADVISING

a. What do they want? Before engaging with a cause of action, will the relief available meet your client’s needs?
(2) Use HEADINGS
(3) Use INTRODUCTIONS
a. EG. “In order for X to assert his rights under the contract, he must first prove an enforceable contract exists. To do
so, he must satisfy the requirements of formation. From the facts, Mr X may have difficulty showing certainty and
consideration.”
b. EG. “The facts indicate neither Mr S, nor Mr L signed a written agreement. This is not fatal to the existence of a
contract for services, but it may make proving the precise terms of the agreement difficult in court…”
c. EG. “The other main issue with finding a valid contract lies with the consideration offered by Mr S. More specifically,
it could be that Mr S…”
(4) Use IRAC (issue; rule; application; conclusion)
a. Always state the points of law and the authority, even if they are simple.
(5) Focus on the CONTENTIOUS POINTS, but do not ignore STATEMENTS OF LAW
a. You must always cover the simple rules (EG. ‘Agreement typically requires offer and acceptance’).
b. But plan your answer around the most contentious points.
(6) Use STRONG CONCLUSIONS
a. If you are asked to provide advice, provide advice.
b. State the issues, which are strong and weak, and balance the factors to make a prediction.

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Anesti 1
 AGREEMENT (PG2)

A contract comes into existence when acceptance of an offer has been communicated to the offeror
Before that point, parties are free to withdraw from negotiations

1) Has an OFFER clearly been made?

An offer must be clear: demonstrating a willingness to be bound to a reasonable person (Macrobertson)

§ Is the language of the offer clear? (Gibson, Mobil)

Language of the offer in the letter was not sufficiently clear
§ Does it use the language of commitment? (Mobil, Gibson).
Speech, marketing: ‘find a way to extend tenure’ ‘perhaps’, ‘maybe’, ‘we hope’.
§ Does it use the language of command (no choice to agree/reject)? (Brambles)
There is no offer when language of command is used, and no choice to accept/reject (Heydon JA, obiter).
§ Was it merely an announcement of policy? (AWM)
Letters disclosed no offer to contract but merely announced subsidy policy.
§ Is it merely an invitation to treat? (Gibson)
‘If you would like to make a formal application to buy your council house…’
§ Is it merely ‘puffery’? (Carlill)
£1000 deposit with the Alliance Bank to ‘show sincerity in the matter’
§ Is it altogether unclear what the offer actually was? (MacRobertson Miller)
Ticket cases: Stephens J and Barwick CJ disagree – is the ticket the offer, or the acceptance?

2) Has the offer been ACCEPTED?

§ Does the offeree’s conduct amount to acceptance?

§ Silence cannot constitute acceptance (Felthouse)
‘If I hear no more about him, I assume the horse is mine’.
§ Exception: is there manifestation of acceptance by conduct? (Empirnall, Brambles).
E: Reasonable person test: if offeree has time to reject offer but takes benefit, acceptance inferred from
conduct (including silence).
B: B implicitly accepted by charging 6c (accepting benefits) (Ipp JA).
§ Did the other party agree to the precise offer (unqualified acceptance)? (Gibson)
No unqualified acceptance even if letter was offer, because G had left the price section blank.
§ Have they communicated acceptance in a manner specified by the offeror?
§ No need for notification of acceptance for unilateral contracts (Carlill)
§ Electronic Transactions Act
§ If not, has an agreement been mutually manifested? (Brambles, Heydon J).
There was no offer, and no explicit acceptance, but can infer agreement without them.

3) Has the offer been REVOKED?

§ Has revocation been communicated to the offeree?

§ Was acceptance communicated before withdrawal?
Acceptance generally has effect only when communication is actually received by the offeror.
§ Exception: Postal acceptance rule: when offer is specifically intended to be acceptable by post,
acceptance may be effective as soon as it is posted (Adams).
§ Electronic Transactions Act
§ Unilateral offers can be revoked any time before completion of performance (Mobil).
à Exception where implied ancillary contract to revoke (Mobil).
§ Bilateral offer can be revoked any time before acceptance (Abbot).
à Exception for options: was there consideration for a promise to keep the offer open? (Goldsborough)

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 CONSIDERATION (PG6)

A contract is not enforceable unless there has been an exchange of valuable consideration
The consideration must be sufficient, but not necessarily adequate (peppercorn rule)

(1) Benefit/detriment requirement: is it legally sufficient?

Some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility
given, suffered or undertaken by the other’ (Currie)

§ Was it past consideration? (Roscorla)

Something given gratuitously or in relation to another/prior promise is not good consideration

§ Was it a promise to perform an existing legal duty owed by A to B? (Stilk)

An existing legal duty is not good consideration: seamen already obliged to complete the voyage.

§ If so, is it an exception to the rule?

§ àWas the promise made as part of a bona fide compromise? (Wigan)
A promise to perform an existing duty by way of a bona fide compromise of a legal claim may constitute
good consideration.
a) Is there a disputed claim, and you honestly believe you are not bound to complete?
W gave up the legit claim to sue for E’s failure to build the house propery.
b) Is the claim frivolous or vexatious (made in good faith)?

§ àDoes the practical benefit exception apply? (Williams, Musumeci).

A promise to perform an existing duty may constitute good consideration where a modifying party
obtains a practical benefit.
a) A and B have an agreement
b) There I reason to doubt A can complete
c) B promises an additional concession or payment
d) As a result B obtains a practical benefit (the consideration) OR A suffers a detriment
e) B’s promise is not given because of A’s economic duress, fraud or unfair pressure

§ àWas it made to a third party? (e.g. performer selling extra tickets).

§ àHas the contract been terminated and replaced?

§ àWas it a deed?

§ Is it something the law doesn’t regard as valuable? (e.g. love/affection).

Kirby P: Beaton working on the land was not classified as consideration because it was entirely for B’s own
benefit, and more akin to domestic and social arrangements. Not incurring detriment. *McHugh and
Mahoney JA disagree.

§ Was it an illusory promise? (Placer) à See ‘Certainty’

(2) Bargain requirement: Was it provided by A in return for B’s promise?

There must be an element of quid pro quo between the promises/acts: the price of the promise (AWM).

§ Was there a relationship of ‘quid pro quo’? (AWM)

There was no relationship of ‘quid pro quo’ between the subsidy payment and the buying of the wool.

§ Or was it merely a conditional gift?

§ Q&DR: was there an explicit or implicit request? (Carlill, AWM).

In Carlill, implicit request.
HC finds no request in AWM, but Privy Council does (question of fact).

§ An act performed in reliance of a promise is not valid consideration (Beaton, AWM).

That Beaton was ‘relying’ on the promise of a conditional gift from McDivitt, the transfer of the title of the
land is irrelevant. It was also not sufficient that AWM had relied on the Cth’s alleged ‘offer’.

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 CERTAINTY (PG11)

Unless parties’ essential obligations are clearly defined, there is no enforceable contract

(1) Is the agreement (or provision) INCOMPLETE?

a. The alleged contract must contain all of the essential elements of the transaction.
b. Courts can impute terms that are necessary (but not those that are essential) (Cavallari)
Court enforced an option to buy land, that only gave names, price, and address.
c. Price is not an essential term, except with land (Hall) or unique items.
Court can imply a reasonable price (the ‘going rate’) depending on the circumstances (but never for land).
d. Time is not an essential term, except in leases (Hall).
Court will find an implication that performance be given within a reasonable time (but never a ‘reasonable lease’).
e. Legislation can also supply an omitted price (The Goods Act 1958)
(2) Is there an ‘AGREEMENT TO AGREE’?
a. An agreement to agree (deferment of essential terms to be decided by parties themselves) renders contract void
for uncertainty.
b. Courts cannot substitute an ‘agreement to agree’ term in a contract: it would undermine the expressed intention of
the parties which is to set the price/term themselves.
c. However, it is not fatal if essential terms are left to be decided by third parties (Godecke)
i. They will be required to act reasonably and consistently with the contract (Walsh J, Godecke).
ii. Does not matter if the third party is your solicitor (but it might if it’s your mum).
iii. If the third party is unable or refuses, the court acts as a substitute (Gibbs J, Obiter, Godecke).
d. Does not apply to parties leaving inessential ‘subsidiary matters’ to be decided (Gibbs J, obiter, Godecke).
e. Godecke: not an ‘agreement to agree’ where essential terms to be decided by third parties.
f. Meehan: not an ‘agreement to agree’ because the finance needed to be ‘satisfactory’ only from the perspective of
M, and therefore did not leave vital matters to be decided between parties (subject to Mason requirements).
(3) Is a provision too VAGUE/UNCLEAR to be enforced?
a. A contract may fail because a particular term is so vague or imprecise that the courts cannot attribute a meaning to it
(Whitlock).
b. If the language is capable of meaning or has several possible meanings, the court will endeavour to give meaning to
the terms (Upper House).
‘Suppliers costs’ had several possible meanings that the Court could give. However, in this case, contract provided
that arbitrator would give ‘final binding decision’ on meaning.
c. The courts cannot give meaning to ‘meaningless’ terms (Whitlock v Brew, Gibbs CJ in Meehan v Jones).
Terms of the C5 lease to Shell were too uncertain to be enforced by the Court or by the arbitrator under the weak
arbitration clause: no ‘reasonable’ rent amount or ‘reasonable’ lease duration (essential terms).
Similar situation in Hall: the court cannot impute a ‘standard’ value of improvements or depreciation.
d. Upper Hunter: terms capable of meaning not too uncertain - Courts can supply meaning.
e. Hall v Busst: mechanism for establishing price too uncertain.
f. Whitlock: no “reasonable” terms discernable, essential terms unavailable, uncertain.
g. Meehan: the term ‘satisfactory’ was not too imprecise for failing to specify whose satisfaction.
h. Biotechnology: there is no way to quantify a ‘reasonable’ or ‘usual’ equity sharing scheme’ (Kirby, McHugh).
(4) Is a provision ILLUSORY?
a. If one party has a complete (not some) discretion or option to carry out a promise within a contract (illusory promise),
the promise is not enforceable (Placer).
The Commonwealth’s promise to pay the subsidy was unenforceable (illusory) because it had absolute discretion as
to whether it would carry out the promise (whether pay, amount) (Kitto J, also Taylor Owen JJ).
There was no standard of a ‘reasonable subsidy’ that the Court could imply.
b. It may not be an illusory promise where the clause is a precondition of the contract, rather than part of the contract
itself (Gibbs CJ in Meehan).
c. It may not be an illusory promise where a provision giving discretion to one party to act, is accompanied with an
implied obligation ‘to do all that is reasonable on their part’ to fulfil that provision (Mason J, in Meehan).
M was under an obligation to make ‘honest and reasonable efforts’ to obtain finance.
d. Placer: illusory promises not enforceable.
e. Meehan v Jones: not an illusory promise for leaving it to M whether would perform obligations (see above).
f. Godecke: terms to be added by one party are not necessarily illusory.
g. Biotechnology: promise was illusory because Biotech retained discretion to implement scheme (Kirby, McHugh).
(5) Can any incomplete, vague, or illusory provision be SEVERED or WAIVED?
a. Missing or unclear inessential terms can be severed and the contract still enforced.
b. The party for whom the illusory/uncertain provision is of benefit to may waive the clause and enforce the remainder.
c. Whitlock v Brew: the cl 5 terms about the lease not severable or waivable, as would drastically alter the contract
the parties intended to enter into.
d. Upper house: Cl 5 not severable, because would make contract fundamentally different (removing means of DR)

A SAFE APPROACH:
(1) Identify the OFFENDING TERM, and write it out in full (underlining the particularly uncertain terms).
(2) Describe what the ISSUE is (incomplete, unclear, illusory, agreement to agree?)
(3) Is the term ESSENTIAL? (If so, the contract is likely in danger. If not, it may still survive).
(4) CHARACTERISE the contract’s objective meaning. Can meaning be supplied (third parties, extrinsic materials, other terms)?
(5) If the term is meaningless or subject to ‘an agreement to agree’, can the term be SEVERED OR WAIVED?

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 INTENTION (PG16)

In order for a binding contract to be made parties must manifest an intention to be legally bound
If there is no express intention, courts ask whether a reasonable person would see intention to be bound (Merritt)

(1) Does a PRESUMPTION arise?

a. Strong resumption that commercial agreements are intended to be binding, unless there are strong
provisions to the contrary (heavy onus on person claiming no intention) (Banque)
b. Weak presumption that domestic and social agreements are NOT intended to be binding (light onus on
person pleading intention) (Balfour)
c. Presumptions weakened: can only determine who bears the onus of proving there was intention, but do not
affect the standard of proof, can be rebutted, and should not form proscriptive rules (Ermogenous).
The ‘spiritual relationship’ in question still had contractual aspects, and so there was intention to be
contractually bound.

(2) Can the presumption be REBUTTED?

a. Ermogenous: The intention to create legal relations requires objective assessment of the state of affairs
between the parties, including:
i. the subject matter of the agreement,
ii. the status of the parties to the agreement,
iii. the relationship between the parties,
iv. other surrounding circumstances.
v. Other considerations:
1. Did the parties act like they intended to be bound? (Ermogenous).
2. Were the statement promissory in character? (Banque)
b. Banque Brussels: ‘Letters of comfort’ generally not contractually liable, unless they were uttered in the
course of business and there was no clear indication that they were not intended to be legally enforceable.
Promissory language + ‘uttered in course of business’ + no intention not to be legally bound = intent to be
legally bound.

(3) If the agreement is PRELIMINARY, did the parties intend to be bound by it or only on signing of the formal
document?
a. ‘Conditional’ agreements will most likely fall into one of thee classes (Masters, majority).
b. Which class a case will fall into will depend on the language used.
c. There is a presumption that the use of expressions such as ‘subject to contract’ and ‘subject to formal
contract’ prima facie indicate that that the parties have done no more than establish a basis for a future
agreement (class 3).

(1) Parties intend to be bound immediately, but propose to restate the terms in a form which is fuller or
more precise, but not different in effect (BINDING);
a. Effect: Performance is not conditional on getting the formal contract, it doesn’t matter if the formal
contract comes into being or not. Parties are bound to perform their obligations upon signing the
preliminary agreement.
(2) Parties have agreed on all the term of their bargain, and do not intend to vary those terms, but have
made performance of one or more of the terms conditional upon the execution of a formal document
(BINDING);
a. Effect: Performance is conditional on executing the formal contract – they have agreed to put a
contract in place, so they will be performing at some stage, but not just yet. Parties are obligated to
bring a formal document into existence and then perform their obligations
b. à Godecke v Kirwan: ‘we have to give possession, but the timing of the giving of that possession is
dependent on the execution of a formal contract’).
(3) Parties do not intend to make a legally binding agreement unless and until they execute a formal
contract:
a. Effect: No legally binding effect; no enforceable contract.
b. à Masters v Cameron is of this class.

Intention in GOVERNMENT agreements

§ A distinction is drawn between the government’s commercial and administrative activities (AWM).
§ AWM: no intention because no supply legislation, announcement by persons unable to commit crown to
expenditure, Commonwealth had no commercial interest in the wool, and the Commonwealth expressly reserved
right to vary subsidy.
§ Placer: intention because language that of legal obligation, agreement commercial in character, parliament
improved agreement and appropriated funds (Windeyer J dissenting judgment, on why intention clear).

“There is an alleged contract. However, there may be an issue with formation, particularly with certainty. The law, as stated
is Ermogenous, is that there is a presumption that there is no intention to be legally bound in non-commercial relationships,
but that this presumption is only a starting point, and one must also look at the objective circumstances of the case to rebut
or confirm that presumption’ (determines the burden of proof).’
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 FORMALITIES (PG20)

At common law, writing and signature is not required for agreements, unless an interest in land is involved

§ S 53(1)(a) of the Property Law Act 1958: an interest in land cannot be created or disposed of except by writing.
§ Instruments Act 1958 (Vic) s 126: signature required for lease, sale, mortgages for land.
§ Contract itself does not have to be in writing, but there has to be a written memorandum that indicates a final
agreement has been reached (Pirie)

CHECKLIST:
1. Agreement for a sale of land, a lease, a mortgage, or any other interest in land?
2. Is the contract WRITTEN, or is there a written memorandum/note of the agreement? (Pirie v Saunders)
3. SIGNED (by person/someone legally authorized)? (see Pirie v Saunders).
Yes if has name, and is recognised as the final record of the contract (authenticated signature fiction).

Pirie v Saunders: the solicitor’s notes were not a memorandum or agreement. Only a note from Pirie to the
solicitor, giving instructions to draft a lease.
§ Not signed (did not ‘recognise as final record of contract’, nor evidence that knew what was
written).
§ Nature of document (written on a napkin).
§ General rule that a memorandum or note of an agreement must come after that agreement is
made (anything earlier merely instructions to draft a lease).
§ Even if memorandum or agreement, lacked sufficient certainty
§ ‘Part of lot B’: insufficient.
§ Masters v Cameron class 3.

à Circumventing SoF.
Equity: part performance (permitted by PLA s 55(d): does not affect part performance: argued unsuccessfully in
Ogilvie).
Equity: constructive trust (permitted by PLA s 53(2): does not affect constructive trusts: argued successfully in
Ogilvie).
Equitable estoppel (Walton Stores).
Misleading and deceptive conduct (Futuretronics).
Restitution (Pavey).

CAPACITY (PG23)

A contract that meets the requirements of agreement, consideration, intention and certainty will nevertheless be void
if one of the parties lacks the capacity to contract.

(1) Minor: prima facie unenforceable unless:

a. Necessaries
b. Beneficial contract of services
c. Acquisition of property

(2) Persons of unsound mind and drunkenness (Collins v May) contracts valid unless:
a. They were wholly incapable of understanding what they were doing (either serious intoxication or
serious mental inability, and relative to the nature of the transaction itself); and
b. The other party knew of their condition (and took advantage of them)
i. Need not be knowledge of precise condition

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 PRIVITY (PG23)

Only a party to a contract is bound to it, and is entitled to enforce it. Third parties cannot enforce a contract.

1) Determining whether P is a party is a matter of contractual characterization (Coulls)

§ Who SIGNED the contract?
Mr C and Mrs C (+)
§ Who is OBLIGED to do things?
§ What do the HEADINGS suggest?
Agreement headed between Mr C and O’Neill.
§ What do the WORDS suggest?
Contract has to be read in its entirety.
§ Who is contributing CONSIDERATION?*
Coulls: consideration may not have to come from all parties in a contract, where it is provided on their behalf by
other parties (Majority and minority judgments agree).

2) If a C is not a party, he or she may still have enforceable rights:

1. C is actually somehow a party and can directly enforce

See above.

2. C persuades B to get SPECIFIC PERFORMANCE

Trident: BC doesn’t want to.

3. Agency: B is C’s agent

Trident: no agency; no evidence McN asking BC to act as its agent; BC not even aware of McN (McHugh J).

4. ASSIGNMENT or NOVATION of right to enforce

Coulls: considered by Taylor and Owen JJ; but no evidence of assignment or novation of rights; only
‘revocable mandate to company to pay Mrs C; mandate lapsed on Mr C’s death).
a. B assigns all benefits to C (assignment).
b. B assigns benefits and obligations to C (novation – wiping hands).

5. B holds the promise on TRUST for C

Trident: Deane J willing to find trust more liberally; intention but implicit; but minority opinion.

6. Australian Consumer Law (eg. warranties)

à See Misleading and Deceptive Conduct

7. A is estopped through C’s detrimental reliance

à See Estoppel

8. Contract is an insurance contract (Trident exception).

a. Now supplemented with statute: S 48 of the Insurance Contracts Act 1948
b. *Brennan and Dawson JJ’s ‘slippery slope’ dissent on the insurance exception; courts will go no
further.

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 MISLEADING AND DECEPTIVE CONDUCT (PG27)

ACL s 18(1): A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead
or deceive

1. WHO is breaching the conduct?

a. ‘Persons’: employers, corporations and individuals s 22(1)(a) Acts Interpretation Act 1901 (Cth)
i. ‘Primary liability’ includes individuals acting on behalf of employer, even though not carrying out business in
own right (Houghton v Arms).
b. Accessory liability: person ‘involved’ in the contravention of s 18 liable for some remedies (see s 236 ACL)
i. ‘Involved’ defined in s 2(1) of ACL (all of the following requirements involve intent).
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced, whether by threats or promises or otherwise, the contravention;
(c) or has been in any way, directly or indirectly, knowingly concerned in, or party to, the
contravention; or
(d) has conspired with others to effect the contravention.
ii. If an employee makes claims that are not true, you can sue the company under s 18, and the employee
under s 18 or under s 2(1), or both. You may choose to only go directly after the employee (under s 18)
where the company is insolvent (as was the case in Houghton), but you would need to do so under the state
FTA.

2. What is the REMEDY being sought?à Considered in depth at stage 7: placed here for the purposes of making preliminary
statement about what the client should be seeking (restitution? Recession? Injunction?) and also double checking that a loss
has actually been suffered/likely to be.

3. Is the conduct in TRADE OR COMMERCE?

a. Conduct in trade or commerce ‘when it involves an aspect or element of activities or transactions which, in their
nature, bear a trading or commercial character’ (Concrete Constructions).
i. NOT internal communications
ii. NOT non-business dealing (between friends).
iii. NOT merely connected with trade and commerce (‘incidental to it’)
iv. Q&DR: Is this what the parties negotiated over? (use common sense).
b. An individual’s misleading and deceptive conduct can still be caught by the Act, even if the trade or
commerce is not their own (Houghton).

4. Who is the AUDIENCE being MISLED?

à Determines the standard by which to determine whether conduct misleading.
a. INDIVIDUALS
i. Whether the conduct is misleading depends on the perspective of the misled in the totality of the
circumstances: including the nature (/sophistication) of the parties, character of contemplated transaction and
parties’ knowledge of each other (Butcher): B characterised intelligent, shrewd, self-reliant business people;
real-estate agent, small staff and incapability (*Kirby disagrees). Nature of transaction $1M waterfront
property purchase, 12 day period, short brochure with disclaimer.
ii. Is the OVERALL/WHOLE CONDUCT misleading? (McHugh J approach in Butcher; including not only
brochure, but also site inspection not covered by disclaimer).
b. PUBLIC at large or CLASS of persons (eg advertising) (Campomar)
i. Objective, reasonable person test: would an ordinary, reasonable person within the audience (that class)
be misled? (Compomar)
ii. They must be misled into error, not merely confused (Campomar)
iii. The ordinary or reasonable member of the class is expected to take reasonable care of their own interests,
but the level of care expected depends on the nature of the transaction (Campomar): in this case, did not
include reading fine print.
iv. Caricatures: would a reasonable audience member believe the caricatured personality may have agreed to
the advertising? (PD v Hogan).

5. Is it misleading CONDUCT?
a. General rule: conduct is misleading when it has the capacity to lead those whom it is directed into error (Henjo)
b. SILENCE?
i. Yes per s 2(2)(b) ACL (‘refusing to do an act’); there must also be:
ii. REASONABLE EXPECTATION of a person in position of party misled that the information would be
disclosed (Gummow J, Demagogue): there was reasonable expectation that D would inform R a license
would need be obtained.
(a) Characterize the conduct: in Butcher they knew the other persons were making an assumption,
and yet did nothing.
iii. *INTENTION to deceive may be necessary: ACL s 2(2)(c)(i);‘otherwise than inadvertently’; perhaps not
necessary, though assume that it is (Gummow J merely was satisfied that the silence was ‘other than
inadvertent’, Demagogue).
iv. *ADDITIONAL CONDUCT to the silence may also be necessary (e.g. in Demagogue silence part of broader
M&D; including positive representation ‘of course there will be access’. In Butcher McHugh J said M&D
included silence at site inspection alongside brochure).

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 c. MAKING A CONTRACT/WARRANTY?
i. S 2(2)(b); a reference to engaging in conduct ‘includes the making of, or giving effect to, a contract or
arrangement’ or ‘the giving of a covenant’, and therefore a contract.
ii. Warranty: promise about an existing state of affairs: (remember, if promise about future conduct, requires s4
ACL steps).
iii. In Accounting Systems, warranty was within the contract.
iv. ‘If a clause in a contract refers to an existing state of affairs, and it is false, it may be considered misleading
and deceptive for the purposes of s 18’, even if not party to a contract (Accounting Systems, Lockhart &
Gummow JJ).
d. PROMISES AS TO FUTURE CONDUCT?
i. ACL s 2(2) defines conduct to include promises; s 4(1) of the ACL provides that false representation about
future matter will be misleading unless the maker of the statement can prove that he or she had reasonable
grounds for making the representation.
ii. Reasonable grounds includes (Futuretronics):
(a) INTENTION to fulfil at time of promise; AND
(b) CAPACITY to fulfil at time of promise
While G was successful property investor, no evidence produced as to whether he could have
paid. Therefore, no reasonable grounds; M&D.
iii. If lacking either of those things, misleading conduct.
iv. Unsure about who bears the onus of proof: per s 4(3)(b), but s 4(2) says presumption is that person making
misrepresentation will be assumed not to have reasonable grounds unless evidence adduced to contrary.

6. Was there a BREACH? (yes/no)

7. If breach, briefly discuss the availability and nature of the available REMEDIES:

S 237 ACL (& 243): orders that the court

S 232: injunctions S 236: damages
thinks appropriate, when $ insufficient
1. Has there been a BREACH of s 18 (or s (2)(1) by participants/accessories)?
2. Must show LOSS or DAMAGE 2. Must show LOSS or DAMAGE, or
Marks: M not suffered quantifiable loss as LIKELY LOSS or DAMAGE
rate still best available. No s236 damages (“Real chance or possibility”, Demagogue)
(McHugh, Hayne and Callinan JJ) Marks: no evidence of future likely loss, so
Futuretronics: no loss, as no other bidders unnecessary for Court to alter contract per s
Henjo: damages awarded 237 (*crit) (majority).
3. Is there a CAUSAL CONNECTION between the loss or damage suffered (or likely to be
suffered) and the misleading and deceptive conduct? (i.e. changed their position in reliance
on M&DC?
2. Loss or damage NOT
In Henjo, non-disclosure caused loss because was a ‘major inducement’ to enter into the
necessary.
contract (even for Tadd’s negligence); note misleading act must occur before party decides
to enter into contract.
Or has the P acted to cause themselves harm?
In Futuretronics, even if there had been other bidders, any other loss suffered was because
F chose not to put the building back on the market).
In Marks v GIO, any loss likely to be suffered by M did not flow from the misleading conduct,
because they had been given the chance to refinance without penalty.
Rare circumstances, damages awarded where expectations disappointed, rather than
reliance loss: e.g. Murphy.

8. Is there an EXCLUSION CLAUSE/CARELESSNESS?

a. EG. ‘The signee does not rely on any statement, affirmation, representation in this document’.
b. General rule: contractual provisions such as ‘exclusion causes’ cannot oust the operation of the ACL (Henjo).
c. But carelessness on the part of the party may affect how the party grants discretionary relief: under s 137B ACL,
‘where loss is suffered as a result of P’s failure to take reasonable care’, a court is to reduce the damages awarded
under s 236(1) to the extent the is just and equitable taking into account their share in their responsibility for the loss
or damage (unless D was acting fraudulently or intentionally to cause the loss).
d. Exception for some disclaimers: ‘Nothing in this contract shall be taken as a representation as to the truth’
i. May be effective when:
(a) Sufficiently prominent
(b) Contemporaneous with alleged misconduct
Henjo: The ‘ousting clauses’ were part of the final contract and occurred after the misleading
conduct; and after CM had already been misled into entering the contract. Could not prevent
M&D.
Butcher: the disclaimer was offered at he same time that the information was given, before a
decision to enter the contract was made
(c) Worded unambiguously
(d) Communicated to the reader that the disclaimer is relevant to information seeking to justify
ii. The nature of transaction, party identity and type of document where disclaimer features also relevant: In
Butcher, majority held disclaimer was effective to prevent the agent’s conduct from being misleading
because of the buyer’s market savvy, research limitations on the real estate agency, and that the disclaimer
featured prominently in a short, two-page brochure, significance of the purchase ($1M waterfront property)
and 12 day time period. Made it difficult to show any reliance.

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 EQUITY (PG37)
1. PART PERFORMANCE

Equity will grant specific performance (or equitable damages) of unenforceable verbal contracts if they have been partly
performed, so that it would be unjust not to enforce them (make the terms of the contract admissible).

§ Very strict test: acts of part-performance must unequivocally and in their own nature substantiate the agreement (Maddison
UK, Mcbride AU) or some contract of the general nature of that alleged (Regent).
§ Relevant acts include those authorised but not required by the contract
§ Must be done in performance of contract, not merely in reliance of it.
§ Evidence by taking possession?
§ Regent: giving/taking of possession sufficient part performance, as acts unequivocally referable to some contract
like that alleged, and done in performance of contract.
§ But will depend on relationship: if stranger takes possession, more likely to be part-performance; if lover or family,
may not be ‘unequivocally referable’ (e.g. Maiden).
§ Evidence by payment of money?
§ General rule: payment of money, even of the whole purchase money of property, may in itself be an insufficient act
of part performance; will need evidence in addition to payment to support the claim (Maddison).

Ogilvie v Ryan
§ Part performance denied: ‘strict’ (Maddison/McBride) test (Holland J).
§ R alleges 4 acts of ‘part performance’: (1) giving up previous tenancy at 63, having lived there for 30 years; (2) moving to
O’s house; (3) performing services of housekeeping and nursing for O; (4) after O’s death, spending substantial sums on the
house (4 - outright dismissed, spent long after trial started).
§ R’s acts did not ‘unequivocally in their own nature substantiate the alleged agreement’ (for an interest in property)
§ R’s acts could be explained on the basis of love or affection, or expectation for another reward.
§ *Holland J uncertain over how ‘strictly’ to apply McBride/Maddison test, given Millet v Regent.

2. CONSTRUCTIVE TRUST

The terms of the agreement may be specifically enforced, even if there is no express intention of the parties to do so, where it
would be unconscionable for the legal owner of the property to deny another person a beneficial interest in the property

A constructive trust will arise when (threshold requirements, Holland J).

§ (1) Common intention that she have a beneficial interest
§ (2) That she altered her position (detriment) or conferred a benefit
§ (3) Unconscionability: that it would be fraud on R for O’s executor to assert legal title to destroy her beneficial interest.

The different types of case:

(1) Where A’s acts were the basis on which B was able to obtain title in the property
§ Bannister v Bannister: A agreed to sell house to B, on condition she could live there rent-free for as long as she liked. Later
B tried to assert absolute title. Held: constructive trust to prevent defeating beneficial interest mutually agreed upon in
acquiring the title: B could not be evicted, and should be allowed to live there rent-free.
§ Binions v Evans: A let B live in cottage rent-free on certain conditions; then sold cottage to C, subject to C honouring the
previous agreement. C sought to get rid of B by ‘terminating tenancy’. Held: C’s conduct inequitable, arose as contrary to the
terms under which C had acquired property. Constructive trust.
§ Ogilvie does not fit into category (1) as R’s acts were not the basis on which O was able to obtain title in the property.

(2)(a) Where two people acquire a property with an intention to share the property, and the non-financial owner has
made financial contributions towards the property (e.g. mortgage repayments, tending to the gardens).
§ Hussey v Palmer: A paid for extension to B’s house, on the condition she could live there. When A moved away, she sought
to recover money as a loan. Held: no intention to repay loan nor promise; constructive trust. B held property on constructive
trust for beneficial interest proportionate to loan amount.
§ Eves v Eves: unmarried couple agreed to purchase dilapidated house in husband’s name as a joint home, as the woman
was underage. She did a great deal of work to fix the house, after which he left her. Held: a constructive trust arose, as he
had led her to believe that she was to have an interest in the property (JJ each found differing bases for trust).
§ Ogilvie does not fit into category (2) as R did not contribute to the financial value of the property/title itself.

(2)(b) As (2)(a), but where the non-financial owner has made non-financial (i.e. personal) contributions , so that it would
be unconscionable not to give her beneficial interest: Ogilvie.

Held (Holland J): O’s executor held the property on trust for the defendant during her life to permit her to occupy the same rent
free for as long as she may desire to do so (*à Not given legal title).

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 ESTOPPEL (PG40)

A QUICK CHECKLIST:
(1) Induced assumption (WHAT was it, and HOW was it induced?)
(2) Detrimental reliance
(3) *Unconscionability?
(4) *Reasonability?
à Remember equity supplements common law, so do not argue estoppel if a contract is clearly available.

PART (I) ELEMENTS OF ESTOPPEL FLOWCHART

NB. Different lecturers will prefer different approaches. Keep this in mind in your exam preparation. Following flowchart based on
Brennan J in Walton Stores.

(1) ASSUMPTION: Did A assume that a legal relationship exists or will exist between A and B?
a. Brennan J in Walton is more specific: either that a particular legal relationship existed or would exist between A and
B
b. However, the ‘legal relationship’ requirement may not be necessary (W v G); noting that W v G does not override
Brennan J’s decision in Walton.
c. …and that the defendant is NOT FREE TO WITHDRAW from the expected legal relationship (in Waltons, having
elected to allow Mr Maher to continue to build, it was too late for W to reclaim its initial freedom to withdraw; in the
days immediately following 11 Nov.

(2) INDUCEMENT: Did B induce that assumption/expectation?

a. Via an express or implied promise. See Waltons for inducement by silence.
b. NOTE: express statement/promise may not be enough (mason and Wilson JJ in Walton – need also to demonstrate
something else; express statement + silence + knowledge that the detriment has occurred (see point 4) and allowing
them to continue).

(3) RELIANCE: Has A taken action in reliance on that assumption?

a. Can be an act or abstention.
b. Did B know of or intend to induce reliance? (Brennan J says is required, but can be implied).
c. Is knowledge or intention always required? (see, eg, Mason CJ and Wilson J in Waltons, Deane J in Verwayen);
does this add the dimension of ‘unconscionability’?
d. Was that reliance REASONABLE?
i. In Walton, Mason CJ and Wilson J find that generally it is not reasonable for a person to rely on a
voluntary promise in a commercial setting; but that W’s overall unconscionable conduct (including site
inspection) was enough to overcome this.

(4) DETRIMENT: Will A suffer detriment arising from reliance if the assumption is not fulfilled? (Je Maintiendrai, Verwayen)
a. Detriment must be significant (Verwayen) or substantial (Je main)
b. Can detriment be implied? Je Maintiendrai,
i. cf Verwayen, Mason CJ found that evidence of detriment needs to be positively demonstrated.
c. Detriment need not be financial – majority in Verweyan found that relevant detriment could include ill health.
d. Can performance of a contractual duty be regarded as detrimental? (Je Maintiendrai, White J, cf Coulls,
Windeyer J)
e. Need to show CAUSATION à that the reliance led to the detriment.

(5) Has B FAILED TO AVOID the detriment (A fulfilling the assumption; giving compensation; giving warning; etc)
a. Verweyan, Mason CJ argument that they had acted to avoid the detriment.
b. In Mobil, Mobil had tried to compensate, thus avoiding detriment.

PART (II) ESTOPPEL REMEDIES

§ Common law estoppel: straightforward (make the expectation fact: will this suffice?)
§ Equitable estoppel: expectation (assumption) based remedy, or reliance based remedy, or somewhere inbetween?

à Equitable estoppel: current approach

(1) STEP ONE: Since Giumelli, Courts will begin on the basis that the relying aprty has a prima facie entitlement to have their
expectation made good (Giumelli, Mason CJ in Verwayen)

(2) STEP TWO: They will then adjust the remedy ‘down’ to aim for the MINIMUM EQUITY: considering
a. Pragmatically: it may be impossible, impractical or inappropriate to fulfil relying party’s expectations (e.g.
claimant’s expectations indefinite, property sold, clean break required, enforcing assumption would cause
hardship to third party): in Giumelli, Robert’s brother Stephen was living on that land with his family and had
made improvements.
b. Minimum equity principle (proportionality): where value of the expected benefit is disproportionate to the
harm that has/would be suffered by the claimant as a result of reliance on that assumption; fulfilment of
claimant’s expectations would be ‘inequitably harsh’, ‘unjust to the estopped party’ or would ‘exceed what could
be justified by the requirements of conscientious conduct’.
i. Difficult to award ‘minimum equity’ when detriment immeasurable (e.g., Donis, the detrimental
reliance included ‘life-changing decisions of a personal nature’; specific performance necessary).
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(3) Minimum equity principle important in three situations:
a. Detriment can be accurately qualified, and is clearly disproportionate to value of expected benefit
àmonetary compensation granted:
i. Young v Lalic, where the $50K paid (financial detriment) in expectation of receiving half of a $400K
property (expected benefit) was clearly disproportionate, and so remedy awarded was the $50K +
interest (RELIANCE)
b. Detriment cannot be precisely quantified, but is still disproportionate to the expected benefit:
i. Jennings v Rice (UK): relying party spent a few years nursing elderly landowner in expectation of
receiving a $400P property. While the court couldn’t quantify the value of the detriment (a few years of
your life nursing someone), nevertheless they felt it was disproportionate to the value of the expected
benefit, and so awarded $200P monetary compensation instead (taking a ‘broad brush’ approach to
determine the remedy, rather than precise figure as in Young v Lalic).
c. When harm can be better prevented from some other means:
i. Sullivan v Sullivan, where relying party had given up the chance to live in public housing (seven year
waiting list) on reliance of brother’s promise of a home for life. The effect of the estoppel was to let her
live in that promised home for another seven years in order to give her an opportunity to return to
public housing (resume her original position).

Commonwealth v Verwayen:
Remedy: Cth cannot amend defence; V gets costs.
§ Mason CJ, Brennan and McHugh JJ: estoppel appropriate, but remedy limited to ‘minimum equity’ required to avoid
detriment suffered by V as a result of C’s changing its mind (cost of wasted legal fees; to deny Cth its defences would be
disproportionate; no evidence submitted that emotional distress flowed from reliance).*
§ Dawson and Deane JJ: estoppel appropriate, but detriment suffered by V more than just the legal costs incurred (only
effective remedy is to prevent Cth amending its defence).
§ Gaudron and Toohey JJ: ‘Cth waived defence’ (therefore cannot change defence).
Majority: Deane and Dawson (estoppel), Gaudron and Toohey J (waiver).

Giumelli
Equitable remedies will aim to make good the relying party’s expectations, but can take the form of a financially
equivalent sum rather than specific performance to perfect expectations.
§ Starting point: Prima facie entitlement to have expectation perfected as long as it did not work an injustice in all the
circumstances of the case (including the effect on any relevant third parties) (Deane J approach in Verwayen).
§ Circumstances of the case: pending partnership action (Orchard business); improvements to the promised lot by Stephen;
the breakdown of family relationships; Stephen and his family still living on the block.
§ To have given Robert the land would be disproportionate, because it was worth a lot more than when it was promised to
him (his expectation as he left it), and Stephen was still living there too.
§ Therefore appropriate remedy in circumstances of case financially equivalent sum of Robert’s expectations (value of
the lot).
§ *Note: court avoids the reliance-based approach, as it would be difficult to put a dollar value on Robert’s reliance loss: not
only the money expended on the house, but also the lost opportunity of working for his father-in-law and perhaps the
breakdown of his marriage.

WvG
th
Quantification of remedy: cost of raising each child until their 18 birthday ($150K) (the reliance).

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 UNJUST ENRICHMENT (PG49)
Always ask: is there a contractual arrangement here? Would I be upsetting that? (Brenner, Pavey, majority + Gleeson in
Lumbers).
In Brenner, no subsisting enforceable contract between the parties for the performance of services.
Money had and received: claim to recover money mistakenly/unjustly paid to another party (David Securities, TA Sundell)
Quantum meruit: the claim to recover reasonable remuneration for services performed (Brenner, Pavey, Lumbers)

BRYAN FACTORS
1. The defendant must have received an ENRICHMENT;
2. The enrichment must have been received AT THE PLAINTIFF’S EXPENSE;
3. The enrichment must have been unjustly received: falling in a recognised grounds of restitution (UNJUST FACTOR); and
4. NO DEFENCE must be available to the defendant.
Disclaimer: not endorsed by HCA; restitution case-by-case; no general right to restitution; warning against ‘top down reasoning’
(Lumbers)

(1) ENRICHMENT
a. Obvious if money (‘incontrovertible benefit’)
b. Less clear for services: (à Brenner) services will be considered beneficial (enrichment) when:
i. A ‘reasonable person in the position of the recipient would have realised that the person providing the
services expected them to be paid for’ (e.g. NOT a tender, gift, preparing a CV); and
Braithwaite should have known Brenner expected payment; even had discussions about mode of
payment.
ii. Recipient FREELY ACCEPTED the services having had reasonable OPPORTUNITY TO REJECT
them.
Both of these elements will be ‘easily satisfied’ when services provided under an unenforceable
contract pursuant to a request in a normal commercial relationship.
iii. Plaintiff must establish payment was not a gift or conditional (e.g. tender, real estate agent; unless
special).

(2) AT THE PLAINTIFF’S EXPENSE

a. Usually obvious.
b. Problematic in specific situations: e.g. Roxborough: P (tobacco retailer) seeking to recoup payment (excise
duty unconstitutionally levied by the state government) from D (tobacco wholesaler), when the retailer had
recouped the expense from its customers.
c. Note Gummow J in Roxborough replaces this requirement with that of unconscionable conduct.

(3) UNJUST FACTORS

a. SERVICES
i. Probably FREE ACCEPTANCE: Reasonable remuneration can be recovered in respect of services
that were freely accepted (Pavey, Brenner), when:
1. A ‘reasonable person in the position of the recipient would have realised that the person
providing the services expected them to be paid for’ (e.g. NOT a tender, gift, preparing a CV);
and
Braithwaite should have known Brenner expected payment; even had discussions about
payment.
2. Recipient FREELY ACCEPTED the services having had reasonable OPPORTUNITY TO
REJECT
Both of these elements will be ‘easily satisfied’ when services provided under an
unenforceable contract pursuant to a request in a normal commercial relationship.
3. Plaintiff must establish payment was not a gift or conditional (e.g. tender, real estate agent;
unless work done falls outside what they normally do in that capacity).
Brenner: Braithwaite requested, freely accepted services and should have known Brenner
expected $
Pavey: the ‘reasonable sum’ contract was evidence that the building work not intended as
gift, and defendant did not render promised exchange value.
ii. Possibly REQUEST
1. Lumbers: Request is all that is needed for a claim in restitution:
It was ‘not enough’ that the L’s had freely accepted the benefit of B’s work, because the L’s
had never requested B to do anything in connection with their house.
2. Implication: request may be an exclusive test for quantum meruit claims per Lumbers
(‘everything is irrelevant except for the request’) or just one way of establishing an obligation
to pay for performed services (the Court didn’t explicitly overrule Pavey).
3. LOWER COURTS often ignore lumbers: R J Baker

b. PAYMENT OF MONEY
i. MISTAKE: Money paid by P to D under a mistake can be recovered:
1. Mistake includes ‘cases of sheer ignorance as well as cases of positive but incorrect belief
(DS)
2. Irrelevant whether mistake of fact (e.g. your BSB is 123 not 124) or law (clause void) (DS)
3. But only where mistake caused the payment (in DS, no factual evidence; remitted to trial
judge).
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 ii. COMPULSON
1. A payment can be recovered if it was made under compulsion/duress
2. Includes threat to cause harm to property, persons, or to infringe on person’s legal rights
(TA.S)
3. Provider’s threat to refrain from performing contractual duty was sufficient compulsion to
justify recovery of payment (TA.S)
iii. TOTAL FAILURE OF CONSIDERATION
1. Money can be recovered where paid for consideration that has TOTALLY FAILED.
Fibrosa: purchaser recovered $ because promise to deliver machine (sole obligation) not
fulfilled.
a. *Unless CONTRACT provides for failure (e.g. ‘if war breaks out, company keeps $)
b. *Unless implied rule in CUSTOM (e.g. rain cricket game; custom no money back)
c. *Unless consideration/contract SEVERABLE (e.g. if machine delivered/paid for in
stages)
2. If the payer has received SOME of what was bargained for, no restitutionary action available
(Baltic).
Baltic: P could not get restitution because received part of what bargained for (10/14 day trip)
3. Possible exception: where the consideration that has failed is SEVERABLE from primary
bargain
a. Roxborough: majority held that the tax could be severed (separate the tax from the
price of cigarettes in the contract), so the appellant (retailer) could claim the windfall.
b. *Kirby J disagrees: the tax was not severable because, although separately
invoiced, was not part of the contract; and you can’t use ‘after the fact’ behaviour to
remit the contract (whether contract said ‘pay $10 or pay $9+1 dollars, either way
the contract said pay $10).

(4) NO DEFENCE
a. ILLEGALITY: benefit conferred pursuant to illegal transaction prima facie irrecoverable.
b. CHANGE OF POSITION:
i. Where D has changed position in good faith on reliance on enrichment.
ii. Operates pro tanto: operates only to extent position has been changed (only pay back the $600).
iii. Position must be changed on the faith of the receipt
DS: court remits case to trial court for more evidence on whether bank had changed its position by
allowing the loan to roll over (factual question).
iv. Must be ‘in good faith’: Gummow article, could be either:
1. Acting ‘honestly’.
2. Acting ‘reasonably’ (should you have checked why you got the money?)
v. Does not extend to ‘ordinary/living expenses’ (money that would have been spent anyway).
C. ESTOPPEL
i. Avon County: employee asks employer why is making random extra payments; employer says ‘don’t
worry about it’; later wants money back; employer estopped. Assumption (money was his), induced
(receipt + statement), detrimental reliance (lost social security, spent the money).
ii. Complete defence: the effect of the estoppel is that Court proceeds on assumption that the money is
yours (would this help?)
d. VOLUNTARY SETTLEMENT OF AN HONEST CLAIM
i. If a person chooses voluntarily to make a payment even if unsure whether they are legally obligated to
do so, they may not be able to reclaim it.
DS: Court remits case back to trial judge, to find evidence of whether DS had made the payment
‘voluntarily’.
e. GOOD CONSIDERATION
i. Payment made under a mistake not recoverable if made for ‘good consideration’ (payer got something
extra)
ii. TEST: what did the particular appellants, in the circumstances, think they were receiving as
consideration? (DS)
iii. Defence failed in DS: Bank argued that DS had received a benefit in lower interest rate, but DS did
not receive anything in particular for their payment of money made under a mistake.

UNJUST ENRICHMENT REMEDIES

Brenner: When a restitutionary claim in quantum meruit successful, court assesses value services based on fair and reasonable
remuneration, quantified in reference to:
1) Market value - reasonable hourly rate (usually):
§ Based on industry rates
§ Taking into account the standing of the person performing and the difficulty of the tasks
§ Multiplied by how many hours it would ordinarily take someone to do
§ Where it is difficult to assess the number of hours involved, court can make a ‘global assessment’.
2) ‘Reasonable’ commission
§ Where commission is customary compensation in industry
§ Difficult where commission may be conditional and event hasn’t occurred (e.g. real estate agent not paid
because house withdrawn from sale. Similar in Brenner: Br had not kept working because contract was
terminated).
§ à Double check: are you sure this wasn’t a tender?
3) Relevance of contract: Where the parties have specified a price, this can be evidence of appropriate
remuneration but is not determinative of it – a reasonable price may be higher or lower (Sopov).
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§ In Brenner, J defined the services as the assumption of the role of manager and performance of consequential tasks.
Assessed services at an hourly rate ($35K), and tested the reasonableness of these amounts by comparison with the
amounts that might have been earned on a commission basis ($31K), deducting for the point when Brenner stopped.
§ In Sopov; A contractor who terminates a contract by accepting the other party’s repudiation has the option of either claiming
contract damages or compensation assessed on a quantum meruit claim for work done. In assessing a contractor’s
entitlement on a quantum meruit, the court will ascertain the fair and reasonable value of the work performed (not K’s ‘at cost’
reliance, but what he would reasonably charge, as in Brenner).
§ As the assessment is non-contractual, the amount of damages recoverable on a quantum meruit may exceed the contract
price (contract price is not a ‘ceiling’ or ‘cap’).
§ It is irrelevant whether or not the work fell outside the original scope of the contract.

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